Looking For A Pullback

With the market completing what seems to be a reasonable 5-wave rally off last week’s low, I think it is now reasonable to expect a pullback. And, normally, we seek a retracement in the .500-.618 region of the prior rally.

As you can see, I have added a support box between the .500-.764 retracement of what I have labeled as wave 1, which is basically the 6828-6883SPX region.  For now, micro support is in the 6945-50SPX region.   Once that breaks, it should provide us with an initial indication that wave 2 is in progress.

Should we see a corrective pullback to the support box, this could be a reasonable low-risk opportunity for a long trade, as it presents a solid risk/reward set up, which is setting up a rally which can exceed 250+ points higher.

As I am writing this update, the market is testing the 6950SPX micro support.  So, a follow through below 6945SPX should signal that wave 2 is in progress.  And, once wave 2 completes, I will set up the Fibonacci Pinball extensions which will provide us our pivot/resistance and targets for wave 3, 4 and 5.

Alternatively, if the drop begins to take shape impulsively, and then we break last week’s low, then it opens the door again for the larger degree pullback I still expect to the 5700-6100SPX region – which still needs follow through below 6720SPX to make it a higher probability. But, for now, the bulls still have the ball.